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Regional Wage Rigidity: The European Union and United States Compared

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  • Michelle Baddeley
  • Ron Martin
  • Peter Tyler

Abstract

In recent years it has been pointed out that regional unemployment disparities are much more entrenched across member states of the European Union (E.U.) than they are in the U.S. A 'conventional wisdom' has emerged to the effect that this difference is due in part to the greater degree of wage rigidity in E.U. regions. In this paper we explore this issue by estimating short run and long run real wage (in)flexibility for the regions in five core E.U. countries (Germany, France, Italy, the United Kingdom, and the Netherlands) and for the U.S. states for the period 1976-1994. We find that real wage (in)flexibility varies across regions both in the E.U. and the U.S., but that, on average, regional wages are no less flexible in E.U. core regions than in U.S. states. The paper also examines some of the possible correlates ofregional variations in wage (in)flexibility. Copyright 2000 Blackwell Publishers inc.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 40 (2000)
Issue (Month): 1 ()
Pages: 115-141

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Handle: RePEc:bla:jregsc:v:40:y:2000:i:1:p:115-141

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-4146

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Cited by:
  1. Pasimeni, Paolo, 2013. "An Optimum Currency Crisis," MPRA Paper 53506, University Library of Munich, Germany.
  2. Clement van de Coevering, 2003. "Structural convergence and monetary integration in Europe," MEB Series (discontinued) 2003-20, Netherlands Central Bank, Monetary and Economic Policy Department.
  3. Roberto Bande & Melchor Fernandez & Victor Montuenga, 2005. "Regional Unemployment in Spain: Disparities, Business Cycle and Wage Setting," Documentos de trabajo - Analise Economica 0035, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  4. Mirko Abbritti; Sebastian Weber, 2008. "Labor Market Rigidities and the Business Cycle: Price vs. Quantity Restricting Institutions," IHEID Working Papers 01-2008, Economics Section, The Graduate Institute of International Studies, revised Jan 2008.
  5. Herwartz, Helmut & Niebuhr, Annekatrin, 2011. "Regional labor demand and national labor market institutions in the EU15," HWWI Research Papers 112, Hamburg Institute of International Economics (HWWI).
  6. Inmaculada Garcia-Mainar & Victor Montuenga-Gomez, 2003. "The Spanish Wage Curve: 1994-1996," Regional Studies, Taylor & Francis Journals, vol. 37(9), pages 929-945.
  7. Peter Huber, 2013. "Labour Market Institutions and Regional Unemployment Disparities," WWWforEurope Working Papers series 29, WWWforEurope.

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